Hines, Boston Properties Break Ground on 101 First St. in San Fran

Boston Properties and Hines have closed on the $192 million purchase of 101 First St. in San Francisco, where they will erect the 60-story, 1.4 million-square-foot Transbay Transit Tower, the tallest building on the West Coast.

Boston Properties and Hines have closed on the $192 million purchase of 101 First Street in San Francisco, where they will erect the 60-story, 1.4 million-square-foot Transbay Transit Tower, the tallest building on the West Coast. The JV partners bought the 50, 0000-square-foot site from Transbay Joint Powers Authority, paying almost $4,000 a foot.

The TJPA will use the money for the Transbay Transit Center at First and Missions streets, a $4 billion transit hub under construction that will feature a bus and rail station and 5.4-acre park on top of it. Both Transbay Transit Tower and Transbay Transit Center are being designed by Pelli Clarke Pelli Architects.

The tower will be 1,070 feet, making it the tallest on the West Coast and beating out New York City’s Chrysler Building for the honor of seventh tallest in the United States. While a ceremonial groundbreaking was held this week to celebrate the sale of the property, actual construction is not expected to begin until summer. The project is slated for completion in 2016.

“This record transaction signifies the investor confidence that we all have in San Francisco’s future,” Mayor Edwin M. Lee said in a news release. “Soon to be the West Coast’s tallest building, the Transbay Tower benefits not only a world-class transit facility but also represents the strength of our city’s economic recovery, providing jobs to build a better, more sustainable future.”

Dan Fasulo, managing director of Real Capital Analytics, expressed some concern that the tower does not have tenants signed yet.

“A lot of the big tenants out there in San Francisco are the fast-growing tech firms. They want space today, not in five years,” Fasulo told Commercial Property Executive. “While you do see some spec construction going on, it’s for buildings a third of this size.”

But Hines Senior Managing Director Paul Paradis noted that tenant interest across the financial, professional and tech sectors had been “extremely high.”

“Now that we are closing on the land and moving full speed ahead with the design, I’m confident that discussions will progress into leasing quickly,” Paradis stated in the release. “Transbay will be a new icon for the city and state, but also a beacon for a progressive anchor tenant looking for the finest, sustainable office space.”

The office market is hot in San Francisco with “vacancy rates near pre-recession levels and asking rents reaching their highest point in over a decade,” according to the fourth quarter 2012 report on the San Francisco Office Market from Newmark Grubb Knight Frank. Most of the leasing is being driven by tech companies. Newmark Grubb Knight Frank reported that four of five leases signed in the fourth quarter of 2012 were for technology tenants, including Salesforce.com, which took 444,271 square feet at 350 Mission Street in the South Financial District.